Lower reserve retirement age not likely

September 26, 2004

By Tom Philpott: Military Update

Advocates for lowering the age-60 threshold for when reserve retirement benefits begin will find little to cheer in a new report from the Government Accountability Office.
With numerous bills before Congress to drop the reserve retirement age to 55 or younger, lawmakers in 2002 directed GAO to review reserve retirement, assess the need for change, and weigh the costs of granting annuities earlier against the benefits of retaining more reservists.
The report, released this month, concludes that the Department of Defense doesn’t collect attrition data in a way to determine whether the services are keeping enough reserve and National Guard members for 20 years or more. DoD also lacks data to show whether offering earlier annuities would even improve personnel retention rates.
Yet the report goes on to give five reasons for Congress to move cautiously, or perhaps not at all, to change reserve retirement. They are:
COST: The retirement fund expense to lower the age at which reserve annuities start would range from a low of more than $5 billion over 10 years to a high of more than $34 billion. The totals include the cost of providing, at age 55 or earlier, both annuities and health benefits.
TOO FEW GAIN: Because only one of four reservists serves long enough to retire, a change in law to start annuities earlier won’t benefit most reservists who served or are now deployed to Iraq and Afghanistan. On the other hand, it would raise the value of retirement for many reservists who might not ever deploy in the war on terrorism. Only a third of reserve component personnel have been activated since Sept. 11, 2001.
BETTER ALTERNATIVES: The services have more efficient ways to raise compensation of deployed reservists. They include hazardous duty pay, family separation allowances and a new, still unused special allowance for military personnel who endure frequent or long deployments.
REBALANCING SKILLS: The Department of Defense is shifting skills previously concentrated in the Reserve and National Guard to active duty forces. This should relieve operational stress on high-demand reserve occupations and soften the argument for changing reserve retirement.
UNINTENDED EFFECTS: Changing reserve retirement could have unintended negative consequences for keeping active duty forces. For example, says GAO, if reserve retirement is changed to provide immediate annuities after 20 years of service, some personnel who planned to remain on active duty until retirement might leave and serve their remaining time in a reserve component.
Rep. Jim Saxton, R-N.J., introduced HR 742, the most popular reserve retirement bill now on Capitol Hill. It would lower the age threshold to 55. So far, it has 190 co-sponsors, a balance of Republicans and Democrats.
The GAO report, Saxton said in a phone interview, hasn’t shaken his support for the bill. In fact, he is encouraged that GAO’s 10-year cost estimate for his bill is $13.6 billion, lower than the $16 billion estimate from the Congressional Budget Office or $19 billion from the White House’s Office of Management and Budget. OMB, Saxton confirmed, opposes the bill.
The notion that most deployed reservists won’t benefit “may or may not, be true,” Saxton said. But what’s clear, he said, “is that we have come to rely on Reserve and National Guard personnel more than ever. Therefore, we need to try to make policy that will encourage people to join and stay.”
Lowering the reserve retirement age, he said, “might encourage reservists not only to join but to stay longer, (given) an earlier light at the end of the tunnel.”
Almost every reservist he has talked to views the bill as a timely benefit boost, a deserved narrowing of the difference in value between reserve and active duty retirement. Saxton predicts this bill, or some less expensive alternative, will be approved as early as next year. More and more lawmakers are learning, he said, “that reserve component personnel are the greatest personnel bargain we have in the military.”
No reserve retirement changes made it into either the House or Senate version of the 2005 defense authorization bill, now in final negotiations.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at:
milupdate@aol.com